<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) January 31, 2000
----------------
Alpha Microsystems
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
California 0-10558 95-3108178
- ----------------------------- ------------ -------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
2722 South Fairview Street, Santa Ana, California 92704
- ------------------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (714) 957-8500
---------------
Not Applicable
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report.)
<PAGE> 2
Item 2. Acquisition or Disposition of Assets
On January 31, 2000, Alpha Microsystems (the "Company") completed the
sale of substantially all of the assets associated with its Alpha Micro Services
Division ("AMSO") and its Alpha Micro Operating System ("AMOS") computer
hardware manufacturing division (collectively the "Business") to R.E. Mahmarian
Enterprises, LLC ("REM") for consideration of approximately $3.2 million,
consisting primarily of liabilities of the Business that were assumed by REM.
The Company also received a ten percent contingent interest upon the occurrence
of certain liquidity events involving REM following its acquisition of the
Business. REM is owned by Richard E. Mahmarian, a current member of the
Company's Board of Directors. The financial terms of the transaction were
negotiated by management of the Company and REM, and the sale of the Business to
REM was approved by a special committee of the Company's Board of Directors. In
addition, the Company received an opinion from an investment banking firm that
the consideration received in the transaction was fair from a financial point of
view.
Assets of the Business sold to REM include certain accounts receivable,
prepaid expenses, other current and non-current assets, inventories, fixed
assets, IT service contracts and capitalized software development costs. The
Company has granted REM the right to use the name Alpha Microsystems, all trade
names, logos and trademarks associated with AMSO and AMOS and has entered into a
five-year license agreement providing REM the right to use the Company's
AlphaCONNECT technology currently being utilized by the Business for REM's
internal use in continuing operations of the Business. Additionally, the Company
has agreed to sublease to REM the portion of the Santa Ana, California facility
presently occupied by the Business.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(b) Pro Forma Financial Information:
Unaudited Pro Forma Condensed Consolidated Financial Statements
(c) Exhibits:
10.1 -- Asset Purchase Agreement dated as of December 31, 1999,
incorporated herein by reference to Exhibit 10.1 of Form
8-K Current Report dated January 14, 2000.
10.2 -- Amendment No. 1 to Asset Purchase Agreement dated
January 31, 2000.
99.1 -- Press release dated February 1, 2000.
2
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: February 15, 2000 ALPHA MICROSYSTEMS
By: /s/ Robert O. Riiska
---------------------------------
Robert O. Riiska
Chief Financial Officer
3
<PAGE> 4
UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS
On January 31, 2000, Alpha Microsystems (the "Company") completed the
sale of substantially all of the assets associated with its Alpha Micro Services
Division ("AMSO") and its Alpha Micro Operating System ("AMOS") computer
hardware manufacturing division (collectively the "Business") to R.E. Mahmarian
Enterprises, LLC ("REM") for consideration of approximately $3.2 million,
consisting primarily of liabilities of the Business that were assumed by REM.
The Company also received a ten percent contingent interest upon the occurrence
of certain liquidity events involving REM following its acquisition of the
Business. REM is owned by Richard E. Mahmarian, a current member of the
Company's Board of Directors. The financial terms of the transaction were
negotiated by management of the Company and REM, and the sale of the Business to
REM was approved by a special committee of the Company's Board of Directors. In
addition, the Company received an opinion from an investment banking firm that
the consideration received in the transaction was fair from a financial point of
view.
In a separate transaction dated November 18, 1999, and as previously
reported, the holder of the Company's outstanding redeemable preferred stock,
Hampshire Equity Partners, II, purchased an additional $5.0 million of
exchangeable redeemable preferred stock on essentially the same terms as the
currently outstanding redeemable preferred stock that is included in
shareholders' equity as of September 30, 1999. The preferred holder also
received warrants to purchase an additional 2,971,620 shares of common stock at
$2.50 per share.
The following pro forma financial data of the Company consists of an
Unaudited Pro Forma Condensed Consolidated Balance Sheet, a 1999 Nine Month
Unaudited Pro Forma Condensed Consolidated Statement of Operations (the "1999
Nine Month Pro Forma Statement of Operations"), a 1998 Ten Month Transition
Period Unaudited Pro Forma Condensed Consolidated Statement of Operations (the
"1998 Ten Month Transition Period Pro Forma Statement of Operations"), and
together the "Pro Forma Statements".
The Unaudited Pro Forma Condensed Consolidated Balance Sheet is
presented as if both the sale of certain assets to REM and the issuance of $5.0
million of exchangeable redeemable preferred stock occurred on September 30,
1999. The 1999 Nine Month Pro Forma Statement of Operations is presented as if
the respective transactions were consummated on December 31, 1998. The 1998 Ten
Month Transition Period Pro Forma Statement of Operations is presented as if the
respective transactions were consummated on February 22, 1998.
The Pro Forma Statements reflect preliminary estimates of the value of
assets sold, the consideration received and transaction costs associated with
the sale of certain assets to REM, as well as costs associated with the issuance
of $5.0 million of exchangeable redeemable preferred stock.
The Pro Forma Statements should be read in conjunction with the
historical financial statements of the Company, the related notes and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included in the Company's Quarterly Report on Form 10-Q for the
period ended September 30, 1999 and the Company's Transition Report on Form 10-K
for the ten month transition period ended December 31, 1998. The Pro Forma
Statements are based upon currently available information and upon certain
assumptions that the Company believes are reasonable under the circumstances.
The Pro Forma Statements do not purport to represent what the Company's
financial position or results of operations would actually have been if the
aforementioned transactions in fact had occurred on such date or at the
beginning of the periods indicated or to project the Company's financial
position or results of operations at any future date or for any future periods.
4
<PAGE> 5
ALPHA MICROSYSTEMS
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands, except share data)
<TABLE>
<CAPTION>
Pro forma Pro forma Pro forma
September 30, Adjustments Adjustments September 30,
1999 Investment Sale 1999
------------ ---------- ----------- ------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 517 $ 4,950(a) $ -- $ 5,467
Restricted cash 300 -- -- 300
Accounts receivable, net of allowance for
doubtful accounts of $657 7,604 -- (1,860)(d) 5,744
Prepaid expenses and other current assets 1,152 -- (549)(d) 603
-------- -------- -------- --------
Total current assets 9,573 4,950 (2,409) 12,114
Property and equipment, net of accumulated
depreciation of $9,963 5,341 -- (3,126)(d) 2,215
Goodwill, net 8,060 -- -- 8,060
IT service contracts, net 637 -- (637)(d) --
Software development costs, net 582 -- (287)(d) 295
Other intangibles, net 170 -- -- 170
Other assets 487 -- (34)(d) 453
-------- -------- -------- --------
$ 24,850 $ 4,950 $ (6,493) $ 23,307
======== ======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Bank borrowings $ 2,250 $ -- $ -- $ 2,250
Accounts payable 2,577 -- -- 2,577
Accrued compensation 1,028 -- (272)(e) 756
Deferred revenue 3,814 -- -- 3,814
Other accrued liabilities 1,074 -- (13)(e) 1,501
440 (f)
-------- -------- -------- --------
Total current liabilities 10,743 -- 155 10,898
Long-term debt 530 -- (30)(e) 500
Other long-term liabilities 134 -- -- 134
Redeemable preferred stock, no par value; 2,501
issued and outstanding, liquidation value $2,556 2,170 -- -- 2,170
Shareholders' equity:
Redeemable preferred stock, no par value,
5,000,000 shares authorized; 12,500
issued and outstanding, 17,500 pro forma;
liquidation value $12,781 actual, $17,781
pro forma 10,693 4,059(b) -- 14,752
Common stock, no par value; 40,000,000
shares authorized, 11,629,820 shares issued
and outstanding 32,825 -- -- 32,825
Warrants 1,764 891(b) -- 2,655
Accumulated deficit (34,046) -- (6,618)(g) (40,664)
Accumulated other comprehensive income 37 -- -- 37
-------- -------- -------- --------
Total shareholders' equity 11,273 4,950 (6,618) 9,605
-------- -------- -------- --------
$ 24,850 $ 4,950 $ (6,493) $ 23,307
======== ======== ======== ========
</TABLE>
5
<PAGE> 6
ALPHA MICROSYSTEMS
1999 NINE MONTH PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share data)
<TABLE>
<CAPTION>
Pro forma
Nine Months Ended Nine Months Ended
September 30, Pro forma September 30,
1999 Adjustments 1999
----------------- ----------- -------------
<S> <C> <C> <C>
Net sales:
IT Services $ 24,050 $(12,380)(h) $ 11,670
Product 3,578 (3,393)(h) 185
-------- -------- --------
Total net sales 27,628 (15,773) 11,855
-------- -------- --------
Cost of sales:
IT Services 17,936 (9,937)(h) 7,999
Product 2,632 (2,619)(h) 13
-------- -------- -------
Total cost of sales 20,568 (12,556) 8,012
-------- -------- -------
Gross margin 7,060 (3,217) 3,843
Operating expenses:
Selling, general and administrative 8,414 (4,868)(h) 3,546
Engineering, research and development 949 (800)(h) 149
-------- -------- --------
Total operating expenses 9,363 (5,668) 3,695
-------- -------- --------
(Loss) income from operations (2,303) 2,451 148
Other expense (income):
Interest income (60) -- (60)
Interest expense 133 -- 133
Other expense (income), net (196) -- (196)
-------- -------- --------
Total other expense (income) (123) -- (123)
-------- -------- --------
(Loss) income before taxes (2,180) 2,451 271
Income tax expense 50 -- 50
-------- -------- --------
(Loss) income from continuing operations $ (2,230) $ 2,451 $ 221
======== ======== ========
Computation of (loss) income from continuing operations
to common shares:
(Loss) income from continuing operations $ (2,230) $ 2,451 $ 221
Dividends on Redeemable Preferred Stock (1,012) (338)(c) (1,350)
Accretion of redemption value on Redeemable Preferred Stock (66) -- (66)
-------- -------- --------
(Loss) income from continuing operations attributable
to common shares $ (3,308) $ 2,113 $ (1,195)
======== ======== ========
Basic and diluted (loss) income from continuing operations
per share $ (0.29) $ (0.10)
======== ========
Number of shares used in computing
basic and diluted per share amounts 11,594 11,594
======== ========
</TABLE>
6
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ALPHA MICROSYSTEMS
1998 TEN MONTH PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share data)
<TABLE>
<CAPTION>
Pro forma
Ten Months Ended Ten Months Ended
December 31, Pro forma December 31,
1998 Adjustments 1998
---------------- ----------- ---------------
<S> <C> <C> <C>
Net sales:
IT Services $ 20,072 $(12,224)(h) $ 7,848
Product 4,068 (3,824)(h) 244
-------- -------- --------
Total net sales 24,140 (16,048) 8,092
-------- -------- --------
Cost of sales:
IT Services 17,222 (10,590)(h) 6,632
Product 3,772 (2,899)(h) 873
-------- -------- --------
Total cost of sales 20,994 (13,489) 7,505
-------- -------- --------
Gross margin 3,146 (2,559) 587
Operating expenses:
Selling, general and administrative 8,674 (4,103)(h) 4,571
Engineering, research and development 1,173 (1,032)(h) 141
Impairment of long-lived assets 2,438 (978)(i) 1,460
-------- -------- --------
Total operating expenses 12,285 (6,113) 6,172
-------- -------- --------
Loss from operations (9,139) 3,554 (5,585)
Other expense (income):
Interest income (88) -- (88)
Interest expense 106 -- 106
Other expense (income), net 370 -- 370
-------- -------- --------
Total other expense (income) 388 -- 388
-------- -------- --------
Loss before taxes (9,527) 3,554 (5,973)
Income tax expense 15 -- 15
-------- -------- --------
Loss from continuing operations $ (9,542) $ 3,554 $ (5,988)
======== ======== ========
Computation of loss from continuing operations
to common shares:
Loss from continuing operations $ (9,542) $ 3,554 $ (5,988)
Dividends on Redeemable Preferred Stock (364) (375)(c) (739)
Accretion of redemption value on Redeemable
Preferred Stock (72) -- (72)
-------- -------- --------
Loss from continuing operations attributable
to common shares $ (9,978) $ 3,179 $ (6,799)
======== ======== ========
Basic and diluted loss from continuing operations
per share $ (0.90) $ (0.62)
======== ========
Number of shares used in computing
basic and diluted per share amounts 11,029 11,029
======== ========
</TABLE>
7
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ALPHA MICROSYSTEMS
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Purchase of Additional Exchangeable Redeemable Preferred Stock
On November 18, 1999, pursuant to Amendment No. 3 to the Securities
Purchase Agreement dated as of August 7, 1998, the holder of the
Company's outstanding redeemable preferred stock, Hampshire Equity
Partners, II, purchased an additional $5.0 million of exchangeable
redeemable preferred stock on essentially the same terms as the
currently outstanding redeemable preferred stock that is included in
shareholders' equity as of September 30, 1999. The preferred holder
also received warrants to purchase an additional 2,971,620 shares of
common stock at $2.50 per share.
(a) Receipt of gross proceeds of $5.0 million, net of direct
transaction costs of $50,000.
(b) The preliminary application of net proceeds to redeemable
preferred stock and warrants results in the following:
Redeemable preferred stock $4,059
Warrants 891
------
Proceeds, net of direct transaction costs $4,950
======
(c) To record dividend on redeemable preferred stock to compute net
income allocable to common shareholders.
2. Sale of Certain Assets to R.E. Mahmarian Enterprises, LLC
On January 31, 2000, Alpha Microsystems (the "Company") completed the
sale of substantially all of the assets associated with its Alpha Micro
Services Division ("AMSO") and its Alpha Micro Operating System
("AMOS") computer hardware manufacturing division (collectively the
"Business") to R.E. Mahmarian Enterprises, LLC ("REM") for
consideration of approximately $3.2 million, consisting primarily of
liabilities of the Business that were assumed by REM. The Company also
received a ten percent contingent interest upon the occurrence of
certain liquidity events involving REM following its acquisition of the
Business. REM is owned by Richard E. Mahmarian, a current member of the
Company's Board of Directors.
(d) Assets sold to REM include the following at historical book value:
Accounts receivable $1,860
Prepaid expenses and other current assets 549
Property and equipment, net 3,126
IT service contracts, net 637
Software development costs, net 287
Other assets 34
------
$6,493
======
(e) Consideration received from REM includes the assumption of the
following liabilities of the Business:
Deferred revenue $2,932
Accrued compensation 272
Other accrued liabilities 13
Long-term debt 30
------
$3,247
======
The deferred revenue amount noted above remains as a liability of
the Company on the date of the transaction and will be amortized
over the remaining lives of the underlying customer contracts.
Prepaid commissions relating to the deferred revenue will be
expensed over the remaining lives of the applicable customer
contracts.
8
<PAGE> 9
In accordance with SEC Staff Accounting Bulletin 81 "Gain
Recognition on the Sale of a Business or Operating Assets to a
Highly Leveraged Entity", no value has been ascribed to the
Company's ten percent contingent interest upon certain liquidity
events involving REM following its acquisition of the Business.
(f) Direct transaction costs, restructuring charges and rent
concessions to buyer are preliminarily estimated to be
approximately $440,000.
(g) To record the estimated loss on disposition.
(h) To eliminate the operating results of the Business.
(i) To reverse the charge for impairment of long-lived assets relating
to the Business.
3. Per share calculations
The aggregate weighted average common share amounts represent the
weighted average common shares of the Company. Common stock equivalents
have not been included in the calculations as they are anti-dilutive.
9
<PAGE> 10
EXHIBIT INDEX
Exhibit
Number Description
------- -----------
10.1 -- Asset Purchase Agreement dated as of December 31, 1999,
incorporated herein by reference to Exhibit 10.1 of Form
8-K Current Report dated January 14, 2000.
10.2 -- Amendment No. 1 to Asset Purchase Agreement dated
January 31, 2000.
99.1 -- Press release dated February 1, 2000.
<PAGE> 1
EXHIBIT 10.2
AMENDMENT NO. 1 TO ASSET PURCHASE AGREEMENT
THIS AMENDMENT NO. 1 TO ASSET PURCHASE AGREEMENT is entered into as of
January 31, 2000, by and between ALPHA MICROSYSTEMS, a California corporation
doing business as AlphaServ.com (the "Seller") and R.E. MAHMARIAN ENTERPRISES,
LLC, a California limited liability company (the "Buyer") (collectively the
"Parties").
RECITALS
WHEREAS, the Parties entered into an Asset Purchase Agreement dated
December 31, 1999 (the "Agreement") and they now desire to amend the Agreement.
WHEREAS, unless otherwise defined herein, all capitalized terms have the
same meaning as defined in the Agreement.
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual covenants contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
Parties agree to amend the Agreement as follows:
AMENDMENTS
1. Section 2.01 of the Agreement is hereby amended to read in full as
follows:
The Closing. The closing of the transactions contemplated by
this Agreement ("Closing") shall occur on or before January 31, 2000 (or
such earlier date as the third party consents are obtained), unless a
later date is agreed to by the Buyer and Seller ("Closing Date"). At
least two (2) Business Days prior to the Closing Date, Seller shall
deliver all of the updated Schedules to Buyer. The Closing shall take
place at the offices of Seller, 2722 South Fairview St., Santa Ana,
California 92704, commencing at 5:00 p.m. California time (or such
earlier time agreed to by the Parties) on the Closing Date.
2. Section 2.02(a)(iv) of the Agreement is hereby amended to read in
full as follows:
Consents. All of the governmental or third-party notices,
consent, waivers and approvals set forth in Schedule 2.02, which are
required for the valid transfer of the Acquired Assets. Provided,
however, that, unless otherwise agreed to by the Parties, to the extent,
if any, that third-party consents to the assignment of Contracts are not
delivered at the Closing, the Buyer shall assume and perform the
obligations of Seller under such Contracts (which performance by Buyer
shall be in the capacity of a subcontractor with respect to Contracts
that relate to service or maintenance obligations of the AMSO division
of the Business) until such Contracts expire or are otherwise duly
terminated, and the failure to deliver consents to the assignments of
such Contracts shall not constitute a breach of this Agreement.
<PAGE> 2
3. Section 2.02(a)(v) of the Agreement is hereby amended to read in
full as follows:
Books and Records. All of the Seller's books, records and files
relating to the Acquired Assets and the Business; provided, however,
that Seller, in its sole discretion, shall retain such books, records
and files as Seller deems necessary or appropriate to retain in
connection with the preparation of Seller's audited or other periodic
financial statements or as otherwise Seller may deem necessary or
appropriate for it to retain in connection with its status as a publicly
traded corporation (all such retained records collectively the "Retained
Records"). Buyer shall have continuing access to any such Retained
Records for inspection and copying with any such copying to be at
Seller's expense.
4. Section 2.03(e) of the Agreement is hereby amended to read in full
as follows:
Consents. Unless otherwise agreed to by the Parties the
following shall occur: (i) with respect to any Contract the assignment
of which is not consented to on the Closing Date and which Contract is
not a contract for service or maintenance, Seller shall maintain until
the expiration of the term of such Contract, the contractual
relationship established therein, to the extent reasonably practicable;
(ii) with respect to any Contract the assignment of which is not
consented to on the Closing Date and which Contract is a contract for
service or maintenance, Seller shall maintain to the extent reasonably
practicable, the contractual relationship established therein for a one
(1) year period following the Closing Date unless such Contract expires
earlier in accordance with its terms or is otherwise terminated other
than by Seller; and (iii) to the extent, if any, that third-party
consents to the assignment of Contracts are not delivered at the
Closing, the Buyer shall assume and perform the obligations of Seller
under such Contracts (which performance by Buyer shall be in the
capacity of a subcontractor with respect to Contracts that relate to
service or maintenance obligations of the AMSO division of the Business)
until such Contracts expire or are otherwise duly terminated.
IN WITNESS WHEREOF, the Parties have executed this Amendment No. 1 to
the Agreement as of the date first above written and all other terms and
conditions of the Agreement not herein deleted or amended remain as stated in
the original Agreement.
SELLER: BUYER:
ALPHA MICROSYSTEMS, R.E. MAHMARIAN ENTERPRISES, LLC,
a California corporation a California limited liability company
By: By:
--------------------------------- ----------------------------------
Douglas J. Tullio Richard E. Mahmarian
Chief Executive Officer Managing Member
2
<PAGE> 1
EXHIBIT 99.1
ALPHASERV.COM FINALIZES AGREEMENT TO SELL MANAGED SERVICES AND
PROPRIETARY HARDWARE BUSINESS DIVISIONS
Company To Focus on Expanding its Internet and
Professional IT Services Divisions
SANTA ANA, Calif., Feb. 01, 2000 - AlphaServ.com (NasdaqNM: ALMI), announced
today that it has completed the transaction with California-based R. E.
Mahmarian Enterprises LLC ("REM") for the sale of its managed services division,
which includes its proprietary hardware manufacturing group, on substantially
the terms described in the company's news release issued on January 4, 2000. As
previously announced, REM will have use of the Alpha Microsystems name, in
addition to all trade names, logos and trademarks associated with the acquired
businesses.
"The finalization of this transaction signifies the consummation of our
strategic business plan to focus on our two highest potential businesses - the
Internet technology division and the IT professional services group," said
Douglas J. Tullio, AlphaServ.com's chairman, chief executive officer and
president. "We can now concentrate on expanding the sales and marketing efforts
of our Internet division, soon to be operating under the name, NQL Solutions
Inc.," continued Tullio. "We plan on growing our technical development group
within this division as well as identifying and evaluating potential strategic
partnership opportunities. Our recent announcement of the NQL Virtual VCR
function and the availability of our Network Query Language (NQL) on the
wireless Palm Computing platform has been very well received and we plan to take
a more aggressive approach in the Internet market."
"The completion of this transaction also enables us to now focus on growing our
professional services division through the expansion of services to customers
primarily in the vertical markets in which we specialize, such as the major
accounting firms, financial institutions, hospitals and pharmaceutical companies
located in the northeastern U.S." Tullio added, "At the same time, we will
continue pursuing strategic acquisitions in this area to further enhance our
professional services offering and increase our market share."
About AlphaServ.com
AlphaServ.com, the d.b.a. name for Alpha Microsystems, is a premier provider of
professional services to the IT marketplace. The company's services include
Internet and Intranet consulting and networking as well as onsite network
support for customers primarily located in the northeastern U.S. For more
information, visit the company's Web site at www.alphaserv.com. The Internet
division of AlphaServ.com, which will be marketing its technologies under the
NQL Solutions name, is the premier provider of intelligent agent technologies to
the global marketplace. This division develops and deploys enabling software
technologies based on its Network Query Language to partner systems integrators
that create information solutions for today's e-businesses, as well as to
organizations developing software applications and Internet services. For more
information, visit www.NQLsolutions.com or call 888.785.3370.
Certain statements in this press release, including statements regarding the
company's plans to grow its technical development group, to take a more
aggressive approach in the Internet market and to continue pursuing acquisitions
to further enhance its professional services offering and increase its market
share, are "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements
involve known and unknown risks and uncertainties, including (i) the company's
ability to identify and fund acquisitions in the professional services area (ii)
the company's ability to fund and retain the necessary personnel to continue
technical development in the Internet division (iii) the ability of the company
to identify and obtain additional funding for its NQL Solutions subsidiary and
other factors. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof.
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